Cash Flow Plans

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DEFINITION of 'Cash Flow Plans'

A method that an insured can use to control the premium payments that they must make on their policies. Cash flow plans allow the insured to coordinate the flow of premiums with his or her own cash flow. This allows the insured to keep his or her funds for as long as possible and thus earn a greater amount of interest on them.

INVESTOPEDIA EXPLAINS 'Cash Flow Plans'

Cash flow plans can apply to all forms of payments and not just insurance. Any consumer can benefit from keeping cash reserves on hand to earn interest instead of paying them out as soon as possible. The larger the amount of the payment, the more critical this issue becomes, as a proportionately larger amount of potential interest is at stake.